Guarding against retirement funds’ arbitrary discretion when allocating death benefits: The urgent need for statutory guidelines
Author: Motseotsile Clement Marumoagae
Affiliations: Associate Professor, School of Law, University of the Witwatersrand and Visiting Associate Professor, Faculty of Law, National University of Lesotho
Source: Journal of Corporate and Commercial Law & Practice, Volume 7 Issue 1, 2021, p. 36 – 62
This article discusses the enormous power enjoyed by retirement funds’ boards to implement or reject deceased members’ clearly expressed wishes in their nomination forms or wills when distributing their death benefits. It demonstrates that boards are vested with wide discretion to apportion death benefits which, at times, is difficult to justify. Further, this leads boards to make incorrect allocations of death benefits by paying some beneficiaries less than others, completely excluding some from the distribution or allocating the entire benefit to one beneficiary. It argues that apart from requiring boards to honestly, rationally and reasonably allocate death benefits in line with the material facts placed before them, there is a need for legislative guidance that can effectively guide discretion exercised by boards of retirement funds when allocating death benefits.